The company already uses a large proportion of the lithium-ion batteries developed for electric vehicles, and plans for two more models on the company's horizon means demand is set to rocket--and Tesla needs to be capable of producing batteries for half a million electric vehicles by 2020.

Locations in Arizona, Nevada, New Mexico and Texas have all been proposed, and it's likely that work will begin in two of these locations to insure Tesla against any early teething troubles.

The decision to start work in two places isn't as odd as it seems, though--Musk has hinted that Tesla may need more than one gigafactory in the U.S. to cope with demand.

“We will end up spending more money than would otherwise be the case to minimize the timing risk,” he told Bloomberg.

Tesla may spend as much as $5 billion setting up the factory, and could employ as many as 6,500 people--hugely important for whatever area Tesla chooses as its battery factory's home.

The upshot of producing batteries in such volume is cost reductions of 30 percent, important to ensure the upcoming lower-price Tesla model is economical to build.

This third-generation model (following the first-generation Roadster and the second-gen Model S and Model X) is expected to sell for a similar price to BMW's popular 3-Series sedan, and offer all-electric range of around 200 miles.

The gigafactory would also supply Musk's other project, SolarCity, with packs for home energy storage.

Tesla's expansion plans don't stop at gigafactory locations, either. The company recently announced it would build a factory for its Model S sedan in China, helping it dodge the country's high import duties.

Musk also says Tesla will set up a charging network in the country, comprising both Supercharger fast-charging stations and regular charging points.